WT/DS379/R 
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ANNEX A 
  
EXECUTIVE SUMMARIES OF FIRST WRITTEN 
SUBMISSIONS OF THE PARTIES 
 
 
Contents Page 
Annex A-1 Executive Summary of the First Written Submission of China A-2 
Annex A-2 Executive Summary of the First Written Submission of the  
United States A-11 
Annex A-3 Response of China to the U.S. Request for Preliminary Rulings A-20 
 WT/DS379/R 
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ANNEX A-1 
  
EXECUTIVE SUMMARY OF THE FIRST  
WRITTEN SUBMISSION OF CHINA 
 
 
(27 April 2009) 
 
 
I. INTRODUCTION  
1. This dispute presents fundamental issues re garding the proper interp retation and application 
of the Agreement on Subsidies and Countervailin g Measures (the "SCM Agreement") and other 
covered agreements.  The four sets of anti-dum ping duty ("AD") and countervailing duty ("CVD") 
determinations at issue are Circular Welded Carbon Quality Steel Pi pe from the People's Republic of 
China ("CWP") , investigations A-570-910 and C-570-911;  Light – Walled Rectangular Pipe and 
Tube from the People's Republic of China ("LWR") , investigations A-570-914 and C-570-915;  
Laminated Woven Sacks from the Pe ople's Republic of China ("LWS") , investigations A-570-916 and 
C-570-917;  and Certain New Pneumatic Off-the-Road Tires from the People's Republic of China 
("OTR") , investigations A-570-912 and C- 570-913.  In each of these determinations the United States 
Department of Commerce ("Commerce" ) made findings and conclusions that were inconsistent with 
multiple provisions of the SCM Agreement.  Co mmerce's conduct of the unde rlying investigations 
was likewise unlawful, leading to frequent denials of the due process and procedural rights of China and other interested parties in these investigations.   
 
II. LEGAL ARGUMENT 
 
A. COMMERCE'S INPUT SUBSIDY DETERMINATIONS IN EACH OF THE FOUR CVD 
INVESTIGATIONS WERE BASED ON FINDINGS OF "FINANCIAL CONTRIBUTION" INCONSISTENT WITH ARTICLE 1 OF THE SCM AGREEMENT 
 
2. In each of the four CVD investigations under challenge, Commerce concluded that the 
Government of China bestowed countervailable subs idies without any legitimate basis for finding the 
requisite financial contributions by a "government " within the meaning of Article 1.1 of the SCM 
Agreement.  None of the financial contributions d eemed to confer countervailable input subsidies in 
these investigations was provided by the Government of China or any of its official agencies.  Rather, 
all of the allegedly subsidized inputs were sold by  corporate entities with se parate legal personalities, 
owned in part or in whole by China (so-called Stat e Owned Enterprises ("SOEs")), and in some cases, 
by private trading companies.       
3. The Appellate Body recognized in US –DRAMS that under well-established principles of 
customary international law, the actions  of state-owned corporate entities are prima facie  private, and 
thus presumptively are not attributable to a Member under Article 1.1 of the SCM Agreement.
1  Their 
ordinary commercial sales thus cannot be deemed  financial contributions unless they have been 
"entrusted or directed" within the meaning of Artic le 1.1.(a)(1)(iv) to provide the goods in question.  
Commerce made no such inquiry in any of the four CVD investigations.  The record before the Panel 
is therefore devoid of any findings that the Govern ment of China entrusted or directed SOEs to 
provide inputs to respondent producers.    
                                                     
 
1 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 112 & n.179.    WT/DS379/R 
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4. Commerce sought to avoid the burden of maki ng an entrustment or direction showing by 
concluding that the SOEs were "public bodies" with in the meaning of Article 1.1(a)(1).  Commerce 
reached this conclusion solely  on the basis of what it characterized as a "rule of majority ownership," 
i.e., if an SOE were majority-owned by the Governme nt of China or a state-owned entity, Commerce 
treated that entity as a "public body" with no furthe r inquiry or analysis.  China submits that the 
conclusion that an entity is a "public body" solely  because it is majority-owned by the government 
cannot be reconciled with the meaning of that te rm, as properly interpreted in accordance with the 
principles of Article 31 of the Vienna Convention on  the Law of Treaties ("Vienna Convention").   
 5. The ordinary meaning of "public body," read in light of the immediate context of 
Article 1.1(a)(i) and the SCM Agreement's object a nd purpose, establishes that it is an entity that 
exercises powers and authority vested in it by th e State for the purpose of performing governmental 
functions.  That conclusion is fully supported by the context provided by other WTO Agreements, 
particularly the GATS, as well as by "relevant rule s of international law app licable in the relations 
between the parties," both of which must be examin ed under the interpretative framework set forth in 
Article 31 of the Vienna Convention.   
 6. Both the Appellate Body and Panels alik e repeatedly have acknowledged that the ILC 
Articles
2 reflect a codification of customary internati onal law and thus constitute "relevant rules of 
international law" for purposes of interpreting th e WTO Agreements.  Most relevant for present 
purposes is the Appellate Body's express endorsement  of the principles set forth in the ILC Articles 
with respect to when the conduct of state-owned en tities may constitute a financ ial contribution within 
the meaning of Article 1.1(a)(1).  In US – DRAMS , the Appellate Body favourably cited the 
Commentary to ILC Article 8, which recognizes that "[s]ince corporate entities, although owned by and in that sense subject to the control of the State,  are considered to be separate, prima facie their 
conduct in carrying out their activities is not attri butable to the State unless they are exercising 
elements of governmental authority [within the meaning of Article 5]."
3  Thus, mere state ownership 
is insufficient, as a matter of international law, to attribute the conduct of a state-owned corporate 
entity to a State, and by extension, to a Member  for purposes of Article 1.1 of the SCM Agreement. 
Thus, in the typical case, the conduct of state-owned co rporate entities is not to be attributed to a State 
unless they are acting on the instructions of, or und er the direction or control of the government 
within the meaning of Article 8, which is cl osely analogous to the standard enshrined in 
Article 1.1(a)(1)(iv), as the Appellate Body recognized in US – DRAMS.  
 7. The only other basis recognized under interna tional law for attributing the conduct of state-
owned corporate entities to a State is if they are "exercising elements of governmental authority" 
within the meaning of Article 5 of the ILC Ar ticles, as the Appellate  Body recognized in US – 
DRAMS .  Article 5 of the ILC Articles addresses the conduct of entities that are "empowered by the 
law of the State to exercise functions of a public character normally exercised by State organs."  Article 5 encompasses within its scope the type of  entity that the SCM Agreement characterizes as a 
"public body" in Article 1.1.  Accordingly, th e standards it establishes for attributing State 
responsibility are directly relevant to interpreting th e proper scope of that term.  The key lesson they 
offer is that government ownership per se  has little to do with attributing responsibility under 
Article 5, and by extension, w ith determining whether an entity is a public body for purposes of 
Article 1.1.  As the Commentary to ILC Article 5 emphasizes, the "decisive criteria" for purposes of 
attribution with respect to such entities is not the degree of government ownership or control over 
them, but rather the fact that they are empowered to exercise governmental authority.
4  
                                                      
2 Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries , 
adopted by the International Law Commission at its Fifty- third Session (2001) [herei nafter ILC Articles] (CHI-
102).    
3 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 112 and n.179 
(quoting ILC Article 8, Commentary para. (6)). 
4 ILC Articles, p. 43, Commentary to Article 5, para. 3 (CHI-102). WT/DS379/R 
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8. In none of the CVD inves tigations did Commerce establish that any of the multiple SOEs 
alleged to have provided financial contributions were empowered  under Chinese law to sell inputs at 
below-market prices in support of governmental policies,  or that they in fact exercised such authority 
when making sales of inputs to the respondent producers or their trading company suppliers. Accordingly, all of the financial contribution findi ngs in relation to inputs provided by SOEs were 
inconsistent with Article 1. 1 of the SCM Agreement.   
 9. With respect to the sale of inputs by pr ivate trading companies, Commerce's financial 
contribution analysis was even more flawed.  Commerce made no inquiry into whether China 
"entrusted or directed" these entities to provide i nputs to the respondent producers, the only basis for 
finding that these entities made a financial contributi on within the meaning of Article 1.   Commerce 
asserted that no such findings were necessary b ecause the trading companies sold inputs they 
purchased from SOEs, which Commerce had conclude d (unlawfully) to be public bodies.  In 
Commerce's view, because the trading companies had thus received a financial contribution, there was 
no need to determine whether they, in turn, had made a financial contribution to the respondent 
producers that purchased their goods.   
 10. The SCM Agreement requires a finding of a fi nancial contribution by a government for every 
transaction or series of transactions that an inves tigating authority determin es to be an actionable 
subsidy.  It necessarily follows that when a respondent producer purchases goods from a private 
trading company, a financial contribution may be deemed to exist only if the evidence supports a 
finding that the trading company itself   was entrusted or directed by the government to provide such 
goods to the respondent producer.  However, in none of the CVD investigations did Commerce 
establish that any of the many private trading companies alleged to ha ve provided financial 
contributions had been entrusted or directed to do so.  Commerce thus  failed to discharge its burden to 
establish through actual evidence the existence of  a financial contribution by a government.    
 
B. COMMERCE'S FINDINGS THAT SOEs  AND PRIVATE TRADING COMPANIES 
PROVIDED INPUTS FOR LESS THAN ADEQUATE REMUNERATION WERE INCONSISTENT WITH THE SCM AGREEMENT 
 11. Commerce's benefit analysis, like its financial contribution analysis, failed to conform to the 
standards established in the SCM Agreement.  Commerce (1) unlawfully presumed that Chinese 
private prices were distorted when selecting benc hmarks to measure the adequacy of remuneration, 
(2) unlawfully presumed that trading companies rece ived benefits in their purchases of inputs from 
SOEs, and (3) unlawfully found a benefit where none  existed by including in its calculations only 
those purchases made for less than the benchmark pri ce, while excluding all purchases made for more 
than the benchmark price.   
 12. The Appellate Body has made clear that "the  possibility under Article 14(d) for investigating 
authorities to consider a benchmark other than  private prices in the country of provision is very 
limited ."
5  The records in the CWP, LWR, and LWS inv estigations contained evidence of the prices at 
which private suppliers in China sold the same i nputs alleged to be provided by SOEs for less than 
adequate remuneration.  As th e Appellate Body recognized in US – Softwood Lumber IV , those 
private prices should have been the "primary benchmark" for determining the adequacy of 
remuneration under Article 14(d) of the SCM Agreemen t.  Instead, Commerce rejected them solely on 
the basis that they were presumptively distorted by  virtue of the degree of state ownership of the 
industries producing the relevant inputs.   
 
13. Commerce's exclusive focus on the degree of government ownership of input suppliers to 
conclude that private prices were  distorted cannot be r econciled with the Appella te Body's recognition 
that "an allegation that a government is a significant supplier would not, on its own, prove distortion  
                                                      
5 Appellate Body Report, US – Softwood Lumber IV , para. 102 (emphasis added).  WT/DS379/R 
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and allow an investigating authority to choose a benc hmark other than private prices in the country of 
provision."6  It also is inconsistent with Commerc e's obligation to undertake the "case-by-case" 
factual analysis that Article 14(d) requires before a finding of distortion lawfully can be made.  Commerce's reliance on alternative benchmarks for me asuring adequate remuneration with respect to 
the provision of inputs in the CWP, LWR and LW S investigations, both from SOEs and from private 
trading companies, was predicated  exclusively on its invalid findings that private prices were 
distorted.  Accordingly, all of Commerce's be nefit calculations relying on those alternative 
benchmarks are invalid.   14. In the CWP, LWR and OTR CVD investig ations, Commerce countervailed the purchases of 
inputs not only from the SOEs, but from the private trading companies as well.  Commerce's 
determinations were flawed, because Commerce neve r established that the private trading companies 
themselves received subsidies by virtue of their purchases of hot-rolled steel ("HRS") and rubber 
inputs from SOEs.  Although Commerce concluded that  the trading companies had received financial 
contributions from the SOEs (unlawfully, as explai ned above), it never investigated whether such 
purchases conferred a benefit.  Therefore, when Comme rce concluded that "all or some portion of the 
benefit" purportedly received by  the trading companies was conferred on the producers who 
purchased inputs from these companies, Commerce presu med the "pass through" of a benefit that had 
not been found to exist in the first place.  15. Finally, Commerce unlawfully created a benefit where none existed by including in its benefit 
calculations in the OTR investigation only those transactions that produced a positive benefit, while 
excluding transactions that yielded no benefit.   Commerce's calculati on methodology cannot be 
reconciled with Article VI:3 of the GATT 1994 a nd relevant provisions of the SCM Agreement, 
which make clear that a countervailing duty is to be imposed in respect of the " product " under 
investigation " as a whole ".  When goods were purchased frequen tly over the period of investigation, 
determining whether remuneration was "a dequate" thus necessarily required an aggregate  analysis 
that took into account all of the respondents' purchases over the entire  period of investigation, 
including those that were made fo r more than the benchmark price, and not merely those that were 
made for less than the benchmark price.  C. COMMERCE'S IMPOSITION OF COUN TERVAILING DUTIES BASED ON ALLEGED 
"POLICY LENDING" PROGRAMMES WAS CONTRARY TO THE SCM AGREEMENT 
 16. In the OTR, CWP, and LWS determinati ons, Commerce imposed countervailing duties based 
on its finding that state-owned commercial banks ("SOCBs") provided preferential, below-market 
loans to respondent producers pursuant to what  Commerce characterized as "policy lending" 
programmes.  China challenges Commerce's findings of  financial contribution, specificity, and benefit 
as they pertain to the OTR determination, and Comme rce's findings of benefit as they pertain to the 
CWP and LWS determinations.  17. The alleged "policy lending" programme that Commerce identified in the OTR investigation 
does not exist.  The basic path of reasoning that  underlies Commerce's "policy lending" construct, 
while difficult to discern, seems to be as follows: (1) Various economic planning documents in China 
contain general statements that encourage the deve lopment of different industries in China, including 
the industries in which the respondent producers allege dly operate;  (2) the Government of China has 
ownership interests in SOCBs;  (3) therefore, a ll loans by SOCBs to respondent producers must be 
"preferential, non-commercial" loan s that the SOCBs made "pursuant to" the alleged "policy" defined 
by the economic planning documents, even thoug h these planning documen ts do not refer to 
preferential loans by SOCBs, and do not in any way target the relevant industries for the provision of 
such loans.  
                                                     
 
6 Appellate Body Report, US – Softwood Lumber IV , para. 102 (emphasis added). WT/DS379/R 
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18. Commerce rejected Chinese interest rates for RMB-denominated loans as the applicable 
benchmark under Article 14(b) of the SCM Agreemen t, on the grounds that these interest rates are 
"distorted" by "government interv entions", and instead used fictiti ous interest rates to evaluate 
whether the loans were "preferential".  In this  way, the "policy lending" construct became self-
fulfilling: because Chinese interest rates were lowe r than the fictitious benchmarks, the loans to 
respondent producers must have been "preferential" , the "policy lending" programmes must therefore 
exist, and the SOCBs must have made these loans "pursuant to" the alleged "policies".  Commerce's 
"policy lending" construct is a circular form of reasoning that brings the "subsidy" into creation 
through its own internal logic.  
19. It is undisputed that all of the loans in ques tion in OTR were made not by the Government of 
China, but by commercial banks in which the gove rnment has ownership interests.  Commerce based 
its financial contribution finding on the theory that the SOCBs are "public bodies", but made no 
finding that the SOCBs made loans in the exercise of governmental authority, an essential prerequisite 
to a "public body" finding.  Nor would any such finding have been possible on the OTR record, 
because the Government of China has not bestowed authority on SOCBs to provide preferential loans 
to tyre producers, either through the national and provincial planning documents on which Commerce 
relied, or through any other means.    20. The same economic planning documents upon which Commerce relied to find a financial 
contribution provided the cornerstone of Commerc e's specificity analysis, and once again these 
documents were unsupportive of the conclusions that  Commerce reached.  The "legislation" on which 
Commerce relied for its finding of de jure  specificity did not, as Article 2.1(a) of the SCM Agreement 
requires, define the elements of the subsidy that  Commerce countervailed.  It therefore could not 
provide the basis for Commerce's finding that  the alleged "policy lending" subsidy was de jure  
specific to the tyre industry.  In addition, Comme rce did not find that the "subsidy" it purported to 
identify in these measures was "explicitly limited" to the tyre industry.  Nor could Commerce 
plausibly have reached this conclusion, because the "subsidy" that Commerce identified for RMB-
denominated loans, even assuming it existed, was av ailable to virtually every borrower in China and 
therefore could not be specific under Article 2.  21. Finally, in all three of the "policy lendi ng" determinations, Commerce was able to find an 
alleged "benefit" for RMB-denominated loans only by resorting to a fictitious benchmark based on 
interest rates that it derived fro m 33 different countries.  This fi ctitious interest rate was not a 
"comparable commercial loan which the firm c ould actually obtain on the market", and was 
inconsistent with Article 14(b) for this reason al one.  Nor does Commerce's rationale for rejecting the 
applicable benchmark under Article 14( b) – that interest rates in Chin a are "distorted" by "government 
interventions" – withstand analysis.  Interest rate s are a tool of monetary policy and are directly 
influenced by government intervention.  These in terventions, which are an ordinary feature of 
monetary policy all over the world, cannot provide a basis to disregard the plainly applicable requirements of Article 14(b).  D. COMMERCE'S IDENTIFICATION OF A "LAND-USE" SUBSIDY IN THE LWS 
INVESTIGATION WAS INCONSISTENT WITH THE SCM AGREEMENT 
 22. In the LWS investigation, Commerce found that the Huantai County Land Bureau provided land-use rights in the New Century Industrial Park to Aifudi, a respondent producer, for less than 
adequate remuneration.  Commerce's finding that the alleged subsidy was "regionally specific" under 
Article 2.2 of the SCM Agreement was deficient on its face.  A finding of specificity under Article 2.2 
requires a finding that the subsidy is " limited to  certain enterprises  located within a designated 
geographical region  within the jurisdiction of the granting authority …".  Pursuant to Article 2.4 of 
the SCM Agreement, any determination of specificity  under Article 2.2 must be "clearly substantiated 
on the basis of positive evidence."  Commerce failed to make the necessary finding that the alleged 
provision of land use rights for less than adequate remuneration was limited according to the terms of  WT/DS379/R 
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Article 2.2, and an investigating authority cannot rely upon Article 2.2 as the basis for a finding of 
specificity in the absence of the re quired finding of limitation.   
 23. Even if Commerce had evaluated the evid ence on the record, it could not possibly have 
determined that the alleged subsidy was limited under the terms of Article  2.2.  First, if a subsidy is 
available to all enterprises within the designated geographi cal region, then it is not limited to certain 
enterprises  within the region.  Evidence on the record demonstrated that all companies inside New 
Century Industrial Park, including Aifudi, paid the same lease rate, except for a few companies that 
negotiated earlier leases.  Second, if a s ubsidy is available to enterprises located outside  the 
designated geographical region, it is likewise not sp ecific under Article 2.2.  The record established 
that commercial leaseholders located elsewh ere in Huantai County paid the same or lower  lease rates 
than those leaseholders inside the industrial park .  Therefore, it would have been impossible for 
Commerce to make the required finding that the alleged subsidy was specific, even had Commerce 
undertaken the necessary evaluati on of the record evidence.  
 
24. Further, Commerce's finding of benefit was inconsistent with Article 14 of the SCM 
Agreement.  As it did with respect to the allege d input subsidies and "policy lending" programmes, 
Commerce rejected the use of land  prices in China as the applicable benchmark under Article 14(d) of 
the SCM Agreement.  Commerce determined that  Huantai County provided land-use rights for less 
than adequate remuneration based on a comparis on to prices for certain industrial property in 
Bangkok, Thailand, over 3,000 kilometres away.
  In Softwood Lumber, the Appellate Body cautioned 
that, even in the "very limited" circumstances in which an investig ating authority can resort to a 
benchmark other than private prices in the count ry of provision, "the benchmark chosen must, 
nevertheless, relate or refer to, or be connected w ith, the prevailing market conditions in [the country 
of provision], and must reflect price, quality, availability, marketability, transportation and other 
conditions of purchase or sale, as required by Article 14(d)."7  Commerce's use of a Thai land 
benchmark to value land-use rights in China do es not satisfy the Appellate Body's standard .  Land 
prices in Thailand (or in any other country) do not "relate or refer to … prevailing market conditions" for land-use rights in China.     E. THE SIMULTANEOUS IMPOSITION OF COUNTERVAILING DUTIES AND ANTI-
DUMPING DUTIES CALCULATED UNDER THE U.S. NME METHODOLOGY 
RESULTS IN AN IMPERMISSIBLE DOUBLE REMEDY FOR THE SAME ALLEGED 
ACTS OF SUBSIDIZATION 
 25. In August 2006, Commerce c oncluded that "market forces in China are not yet sufficiently 
developed to permit the use of prices and costs in that country for purposes of the Department's 
dumping analysis."
8  Accordingly, Commerce continues to  designate China as a non-market economy 
("NME"), and to reject Chinese producers' actual costs and prices for the purpose of determining 
normal value.  In March 2007, seven months after Commerce elected to contin ue to designate China 
as an NME, Commerce found that "market forces now de termine the prices of more than 90 per cent 
of products traded in China" and these market for ces are sufficiently developed to evaluate whether a 
particular alleged subsidy "constitutes a dist ortion in the normal allocation of resources."9   
 
26. This paradoxical set of findings led Comme rce, for the first time, to apply its NME 
methodology in AD investigations simultaneously  with the application of countervailing duties to the 
same categories of imports.  This is contrary to Commerce's stated position, over the course of nearly 
25 years, that it is "impossible" to identify subsid ies in a country that Commerce has designated as an 
                                                      
7 Appellate Body Report, US – Softwood Lumber IV,  para. 103.   
8 PRC Lined Paper Memo, p. 4 (30 Aug. 2006) (Final Loan Benchmark and Discount Rate 
Memorandum, Attachment 2 (7 July 2008) (OTR)) (CHI-88).    
9 Georgetown Steel Memo, p. 5 (29 Mar. 2007) (CHI-89).    WT/DS379/R 
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NME, "because the concept that the receipt of a subsidy constitutes a distortion in the normal 
allocation of resources has no meaning in such an economy."
10    
 27. The rationale for designating a country as an NM E is that prices and costs within an NME are 
not determined by market forces and, therefore,  are not considered an appropriate basis for 
determining normal value.  It is this determination that allows an investigating authority to replace the 
producer's actual costs and prices with what it consid ers to be market-determined costs and prices, and 
to calculate a dumping margin from this market-determined position.  28. Likewise, the rationale for imposing counter vailing duties is that a government has provided 
productive resources to a company on terms that were  not market-determined.  The Appellate Body 
has repeatedly emphasized that a subsidy "benefit" exists if a company has received a financial 
contribution on terms more favourable than those availa ble to the recipient in the market.  It is the 
market-determined outcome that provides the basel ine for determining whether a company is better 
off than it would have been in th e absence of the government financial contribution.  The purpose of a 
countervailing duty is to offset the competitive advantage that the producer thereby obtains. 
 29. And therein lies the problem of imposing two remedies for the same alleged acts of subsidization.  Fundamentally, the rationale fo r using an NME methodology to determine normal 
value in an anti-dumping investigation subsumes the rationale for imposing countervailing duties on 
imported products.  By applying  both remedies simultaneously, Commerce necessarily will offset any 
alleged subsidies twice – once when it calculates an anti-dumping margin on the basis of a "surrogate" 
market-determined cost of production, and again wh en it calculates a countervailing duty on the basis 
that the producer obtained its productive resources on market-determined terms.  Prior to its determination in CFS Paper,  Commerce had consistently maintained that, with respect to a particular 
country or industry, it could either  apply its NME methodology in an anti-dumping investigation or it 
could apply countervailing duties, but it could not apply both simultaneously.  This understanding was 
affirmed by the U.S. courts, endorsed by the U.S. Congress, and directly reflected in Commerce's CVD regulations.  In CFS Paper, however, Commerce abandoned this principle – at least as it relates 
to China.    30. Commerce does not deny that the concurrent application of the NME methodology and 
countervailing duties could give rise to a double remedy, but Commerce has taken the seemingly 
contradictory positions that: (a) it lacks authorit y under U.S. law to avoid the imposition of double 
remedies in the case of imports from NME countries;  but (b) to the extent that it actually has some 
unspecified authority to address this problem, the existence of a double remedy is a factual question for which the respondent producer bears the burden of  presenting "evidence" that "domestic subsidies 
automatically lower prices (including export prices) pro rata …."
11   
 31. First, to the extent that Commerce lacks authority to avoid the imposition of double remedies in the case of imports from NME countries, U.S. law is inconsistent with the covered agreements, 
both as such and as applied in the present investig ations.  According to the SCM Agreement, the 
purpose of a countervailing duty is to "offset[] any subsidy bestowed directly or indirectly upon the 
manufacture, production or export of any merchandise, as provided for in paragraph 3 of Article VI of 
GATT 1994."  Article 19.4 of the SCM Agreement st ates that "[n]o countervailing duty shall be 
levied on any imported product in excess of the amount of the subsidy found to  exist, calculated in 
terms of subsidization per unit of the subsidized and exported product."  And Article 19.3 of the SCM 
Agreement states that "[w]hen a countervailing duty is imposed in respect of any product, such 
countervailing duty shall be levied, in the appropriate amounts  in each case, on a non-discriminatory 
basis on imports of such product …."  When the United States imposes an anti-dumping duty on an imported product, calculated in accordance with its NME methodology, and simultaneously imposes a 
                                                     
 
10 CFS Paper I&D Memo, pp. 23-24 (internal citations omitted). 
11 CFS Paper I&D Memo (AD), p. 13.  WT/DS379/R 
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countervailing duty on the same produc t, it has necessarily levied a countervailing duty that is "in 
excess of the subsidy found to exist" and is not "i n the appropriate amounts", in violation of the SCM 
Agreement.   32. China considers that a double remedy arises in all cases in which Commerce applies its NME 
methodology in conjunction with countervailing duties,  while Commerce appears to consider that a 
double remedy arises only where there is "evidence" that "subsidies pass through, pro rata , to U.S. 
prices".  In either event, U.S. law is inconsistent  with the covered agreements if Commerce lacks legal 
authority to address the problem of double remedies in NME investigations under any circumstance.  
In addition, without regard to whether Commerce h as any legal authority to avoid the imposition of 
double remedies, its imposition of double remedies for the same alleged acts of subsidization in the 
investigations at issue in this dispute was incons istent with the United States' obligations under the 
covered agreements.  33. Second, to the extent that Commerce has le gal authority to avoid the imposition of double 
remedies in parallel AD/CVD investigations of NME imports only if producers present "evidence" 
that "subsidies pass through, pro rata, to U.S. prices" , U.S. law is again inconsistent with the covered 
agreements, both as such and as applied.  Contrary to Commerce's assertions in CFS Paper  and in the 
subsequent determinations at issue in this dispute, the existence of a double remedy is not a factual 
issue for which the respondent producer bears the burden of presenting "evidence".  Rather, as Commerce correctly understood for nearly 25 years prior to CFS Paper,  the use of an NME 
methodology in an anti-dumping investigation and the application of countervailing duties to the same 
products are mutually exclusive of each other, in thei r entirety.  To the extent that some unspecified 
provision of U.S. anti-dumping law allows Commer ce to avoid the imposition of double remedies, but 
only if the respondent producer presents "evidence" on the irrelevant issue of whether "subsidies pass 
through, pro rata , to U.S. prices", this provision of law, what ever it might be, is inconsistent with the 
United States' obligations under the covered agreements. 
 34. This inconsistency is both as such and as a pplied.  For the reasons set forth above, the 
imposition of double remedies for the same alleged acts of subsidization is inc onsistent with the SCM 
Agreement and Article VI of the GATT 1994.  To the extent that U.S. law conditions the avoidance of 
a double remedy for the same alleged acts of subsidiz ation upon the presentation of "evidence" that is 
irrelevant to the occurrence of a double remedy, this provision of law is and will be inconsistent with 
the United States' obligations under the covered ag reements in all cases in which it is applied.  
Without regard to whether there is, in fact, any pr ovision of U.S. law that requires "evidence" that 
"subsidies pass through, pro rata , to U.S. prices", Commerce's insistence upon such "evidence" in the 
present investigations as a condition to the avoida nce of a double remedy was likewise inconsistent 
with the United States' obligations  under the covered agreements.   
 35. Finally, separate and apart from the unlawfu l imposition of double remedies for the same 
alleged subsidies, the United States has denied imports from China most-favoured nation treatment under Article I:1 of the GATT 1994 by failing to extend to these imports the same unconditional 
entitlement to the avoidance of double remedies th at it extends to imports from countries that it 
designates as market economies.  Commerce has mainta ined a consistent set of policies and practices 
to avoid offsetting the same subsidies twice thr ough the manner in which it calculates anti-dumping 
duties, at least in investigations involving impor ts from countries that the United States has designated 
as market economies.  In the case of imports  from China, Commerce ha s stood these policies and 
practices on their head.  This treatment not only deprives Chinese imports of most-favoured nation 
treatment under Article I:1 of the GATT, but it al so serves to underscore Commerce's consistent 
recognition of the impermissibility of offsetting the same subsidies twice. 
 WT/DS379/R 
Page A-10  
 
F. COMMERCE'S CONDUCT OF THE FOUR CVD INVESTIGATIONS UNDER REVIEW 
FAILED TO COMPLY WITH THE DUE PROCESS AND PROCEDURAL REQUIREMENTS OF THE SCM AGREEMENT 
 36. Commerce violated Article 13.1 of the SCM Agreement when it failed to invite China for 
consultations prior to the initiation of investigations  into so-called "new subs idy allegations".  Long 
after a countervailing duty investigati on is initiated, U.S. law permits pe titioners effectively to start an 
entirely new investigation by submitting subsidy alle gations not presented in their original petition.  
This occurred in each of the four determinations  at issue, and twice each in the CWP and OTR 
investigations.  In total, Commerce initiated six sep arate investigations into new subsidy allegations, 
without once inviting China for consultations.  Commerce also failed to comply with Article 12.1.1 of 
the SCM Agreement by refusing to give China and the respondent producers at least 30 days to respond to all questionnaires issued in the CVD in vestigations, including questionnaires issued in 
response to new subsidy allegations, as well as so -called "supplemental" questionnaires.  Finally, in 
connection with its determinations in CWP a nd LWR that producers obtained a countervailable 
subsidy whenever the HRS they purchased from privat e trading companies had been produced by an 
SOE, Commerce failed to give China and the res pondent producers notice of the information it 
required, in violation of Article 12.1 of the SCM Agreement.  Having failed to give such notice, 
Commerce improperly resorted to "facts availabl e" in order to determine the amount of SOE-
produced hot-rolled steel that respondent produ cers had purchased from trading companies, in 
violation of Article 12.7 of the SCM Agreement.   
 
III. CONCLUSION 
 
37. For the reasons set forth in China's Firs t Written Submission, as summarized herein, China 
respectfully requests that the Panel recommend that  the United States bring the challenged measures 
into conformity with its obligations un der the relevant covered agreements.   
 
  WT/DS379/R 
 Page A-11 
 
 
ANNEX A-2 
  
EXECUTIVE SUMMARY OF THE FIRST WRITTEN 
SUBMISSION OF THE UNITED STATES 
 
 
(8 June 2009) 
 
 
I.  INTRODUCTION  
 
1. In this dispute, China urges the Pane l to accept unsupported interpretations of WTO 
provisions so as to limit the effective applicab ility of the anti-dumping (AD) and countervailing duty 
(CVD) disciplines, and to ignore the particular features of China's economy, well documented on the 
records of the investigations at issue, that substan tiate the determinations made by the Department of 
Commerce (Commerce) in those investigations.   
II. REQUEST FOR PRELIMINARY RULINGS  
 
2. The alleged "failure of the United States to provide legal authority for [Commerce] to avoid 
the imposition of a double remedy" is not a "specific measure at issue" in this dispute and, 
accordingly, is not within the Panel's terms of refe rence.  China's complaint is not about the absence 
of any "legal authority," but a requirement it believes to exist under U.S. law to apply AD and CVD measures in a way that results in the alleged "doubl e remedy."  By failing to identify the U.S. legal 
provisions underlying this alleged requirement, China denied the United States and third parties 
notice, to which they were entitled under Article 6.2 of  the DSU, of the measure that give rise to the 
alleged impairment of  benefits at issue in this dispute.  
 3. In addition, by introducing this alleged "measu re" for the first time in its panel request – and 
not in its request for consultations – China seeks to  expand the scope of the dispute and enlarge the 
Panel's terms of reference.  In its  consultations request, China explicitly limited the matter at issue to 
determinations and orders issued  in connection with eight specific investigations by Commerce.  
Notwithstanding this clear limitation of the scope of  the dispute, in its panel request China went 
beyond those specific, identified in vestigations to add claims agai nst this wholly new "measure."  
China's addition of this new "measure" converted the dispute from one limited to a series of "as 
applied" claims to a dispute that now in cludes a "measure" challenged "as such."  
 
III. COMMERCE'S FINANCIAL CONTRIBUTION DETERMINATIONS ARE 
CONSISTENT WITH THE SCM AGREEMENT 
 
4. Commerce's determinations in the challenged CVD investigations that certain Chinese state-
owned enterprises (SOEs) and state-owned comme rcial banks (SOCBs) were public bodies were 
based on a proper interpretation of the term "public b ody" in Article 1.1(a)(1) of the SCM Agreement.  
The ordinary meaning of the term "public body", read in its context and in light of the object and purpose of the SCM Agreement, indicates that a pub lic body is an entity that is owned by the 
government, but not necessarily authorized to exercise, or in fact exercising, government functions.   
 
5. The ordinary meaning of the term "public" in cludes the following:  "belonging to, affecting, 
or concerning the community or nation"; "[r]elating or belonging to an entire community, state, or nation"; "of or relating to the people as a whole; that  belongs to, affects or concerns the community or 
the nation"; and "[i]n general, and in  most of the senses, the opposite of private ."  However one WT/DS379/R 
Page A-12  
 
examines the term "public," the ordinary meaning of that term includes the notion of belonging to, or owned by, the state.  If an entity is owned by the state, the ordinary meaning of the term "public" indicates that such entity can be a "public body".  6. The context of the term "public body" supports  this interpretation.  The SCM Agreement uses 
two different terms in referring to the types of entity that can provide a financial contribution, 
"government" and "public body."  Thus the terms " government" and "public body" must have distinct 
and different meanings.  China mistakenly conf lates these two terms, suggesting that they are 
"functional equivalents".  This cannot be the case,  or there would have been no need to use two 
different terms in Article 1.1( a)(1) of the SCM Agreement.  
 
7. China's reliance on the definition of the term  "public entity" in the GATS as context for the 
interpretation of "public body" is also inappropr iate, as the terms are different, and the two 
agreements relate to different subject matter.   The Working Party Report on China's accession, 
however, is relevant context and provides a recognition by China that its state-owned enterprises are 
public bodies that provide financial contributions and a commitment by China to this effect.  
 8. China's interpretation of "public body" also  cannot be reconciled with the object and purpose 
of the SCM Agreement, which the Appellate Body has explained includes the right of WTO Members 
to "fully offset, by applying countervailing duti es, the effect of the subsidy as permitted by the 
Agreement."  Consistent with this  object and purpose, and the need to prevent circumvention of the 
SCM Agreement, the term "public body" should be  interpreted so that subsidizing governments 
cannot use SOEs to avoid the reach of the SCM Agreement.   9. The meaning of the term "public body" was at issue in the Korea – Commercial Vessels  
dispute.  The panel there concluded that "an entity will constitute a ‘public body'  if it is controlled by 
the government (or other public bodies)."  That pa nel's reasoning is consistent with the ordinary 
meaning of the term "public body" in its context and in light of the object and purpose of the SCM Agreement.  Majority government ownership can demonstrate control.  10. Commerce's determinations that certain stat e-owned enterprise producers of hot-rolled steel, 
rubber, and petrochemicals are "public bodies" are consistent with Article 1.1(a)(1) of the SCM 
Agreement.  Commerce applied a rule of majority  ownership to determine whether an entity was a 
public body.  Because Commerce properly determined  that certain SOEs and SOCBs were public 
bodies, no entrustment or direction analysis was required.    11. In addition, Commerce's treatment of sales made through private trading companies was 
proper and fulfilled the requirements of Article 1 of the SCM Agreement.  China argues that 
Commerce was required to find that public bodies "e ntrusted or directed" the trading companies to 
sell goods to the respondents.  China ignores the fact that the SCM Agreement contemplates situations 
in which the benefit might be received by differe nt recipients.  China appears to assume that 
Article 1.1 of the SCM Agreement requires there to be  only one recipient, and that this recipient must 
receive both the financial contribution and the entir e amount of the benefit.  China has offered no 
basis for this assumption.  In this case, the fi nancial contribution occurred with the sale of goods 
(whether hot-rolled steel or rubber) by the public body SOEs to the intermediary trading companies.  
This government provision of goods then conferre d benefits upon the respondent producers of CWP , 
LWRP , and OTR Tires , when the trading compan ies sold the goods to these respondents.  Although 
the intermediary trading companies received the fina ncial contribution and perhaps some benefit, this 
possibility does not preclude the respondent subject merchandise producers from receiving a benefit.   
 12. Commerce's finding in the OTR Tires CVD determination that SOCBs are "public bodies" is 
consistent with Article 1.1(a)(1) of the SCM Ag reement.  Commerce found that the Government of 
China holds dominant ownership stakes in the SOCBs .  Outside commentators have remarked that the  WT/DS379/R 
 Page A-13 
 
 
government's ownership of banks is "exceptional."  China does not dispute this.  Given China's 
ownership of its banks, these banks are "public bodies."  
 13. China's argument that Commerce's benefit an alysis undermines its public body determination 
conflates the "public body" question with the ques tion of benefit.  This is the same mistaken 
interpretation of Article 1.1 of the SC M Agreement rejected by the panel in Korea – Commercial 
Vessels .  
 
IV. COMMERCE'S BENCHMARK DETERMI NATIONS ARE CONSISTENT WITH 
THE SCM AGREEMENT  
 
14. The Appellate Body has previously acknow ledged that Article 14 of the SCM Agreement 
provides flexibility, should not be interpreted or app lied in an overly restrictive manner, and permits 
the use of out-of-country benchmarks in certain situ ations.  In addition, pa ragraph 15(b) of China's 
Accession Protocol and paragraph 150 of the Work ing Party Report confirm the permissibility of 
using out-of-country benchmarks to measure any be nefit in CVD investigations concerning imports 
from China.  Paragraph 15(b) expressly recognizes that "prevailing terms and conditions in China 
may not always be available as appropriate benchmarks."   
 15. Commerce's determinations to use external  benchmarks were based on findings that the 
dominant role of the Chinese government in various markets distorted prices and interest rates in 
China.  Commerce used Chinese pr ices whenever they were available and appropriate as market 
benchmarks.  Where the facts demonstrated that Chinese prices were distorted by the government's 
predominant role in a market and unsuita ble as commercial benchmarks, Commerce used 
market-derived prices from outside of China.   
16. China alleges that Commerce applied a " per se  rule" that only considered the degree of state 
ownership of the industries.  China mischaracter izes Commerce's decisions and ignores the detailed 
rationale Commerce provided for each of its factual conclusions.  Commerce reviewed all record evidence and determined appropriate benchmarks on a case-by-case basis in each of the challenged 
investigations.  Indeed, in the OTR Tires CVD investigation, based on record evidence, Commerce 
did not find government distortion of the PRC rubber markets, and used actual import prices and 
domestic purchase prices from private producers as be nchmarks, even where the government owned 
the majority of the domestic production.  17. In the case of the government provision of hot -rolled steel, petrochemical s, policy loans, and 
land-use rights, however, Commerce determined, based  on all of the evidence on the record of the 
investigations, that domestic prices and interest rates in China were distorted because of the 
predominant role of the Chinese government in th e markets, rendering those domestic prices and 
interest rates unsuitable as benchmarks.  Conseque ntly, Commerce determined that it was necessary to 
use out-of-country benchmarks to measure benefit.  18. Furthermore, China's assertion that Commerce di d not "make any effort whatsoever to ensure 
that these benchmarks related to prevailing market conditions in China" is without foundation.  For 
input subsidies, Commerce relied upon world mark et prices and made adjustments to account for 
"prevailing market conditions," consistent with Article 14( d) of the SCM Agreement. 
 19. In evaluating the benefit of government-pr ovided loans, after Commerce established that it 
would not be possible to use RMB-denominated lo ans provided in China, it developed an out-of-
country benchmark interest rate to measure benef it.  To do so, Commerce used a group of interest 
rates, rather than just one out-of-country interest  rate, because various factors can impact national 
averages for interest rates.  Commerce's benchmark accounted for the maturity of the loans, adjusted 
for exchange rate expectations through an infla tion adjustment accounting for currency differences, 
matched lending during the same time periods, a nd factored in the quality of the countries' WT/DS379/R 
Page A-14  
 
institutions, a known influence on interest rat es.  Through these means, Commerce calculated 
comparison interest rates that were tailored to a pproximate a "comparable commercial loan which the 
firm could actually obtain on the market," as require d by Article 14(b) of the SCM Agreement.   
 20. China's argument that Commerce was re quired to use RMB-denominated loans as 
benchmarks, which would mean that Commerce was required to use in-country benchmarks because 
RMB-denominated loans are not available outside  China, is untenable.  China's position is 
inconsistent with the Appellate Body's interpretation of Article 14 of the SCM Agreement and the 
commitments China made in its Accession Protoc ol.  Moreover, under China's interpretation, 
assuming the absence of any commercial loans in a particular currency, if a government provides 
loans in that currency, it would not be possible for another Member to measure benefit at all.  Not 
only does the text of Article 14 not require that interpretation, but such an outcome would be 
incongruous with the flexible nature of the guidelin es in Article 14 and the object and purpose of the 
SCM Agreement to permit Members to fully offset  the benefit of injurious subsidies.     
 
21. China's argument that Commerce improperl y used a yearly average LIBOR rate as a 
benchmark is without support.  Article 14(b) of  the SCM Agreement contains no preference for a 
daily rate over a yearly average. The benchmark developed by Commerce for these loans matched the duration and the currency denomination, and was structured on the sam e basis as GTC's loans 
(LIBOR plus a spread).  In light of the flexibilit y afforded by Article 14, Commerce's comparison was 
consistent with the guideline in Ar ticle 14(b) of the SCM Agreement. 
 
22. Similar to its position on RMB lending, China argues that Article 14(d) of the SCM Agreement prevents Members from ever using an out -of-country benchmark to measure the benefit of 
land-use rights provided by a government.  China's pos ition is inconsistent with the Appellate Body's 
interpretation of Article 14 of the SCM Agreement and the commitments China made in its Accession 
Protocol.   
 23. Based on record information, Commerce de termined to measure benefit by comparing 
respondents' land-use rights to the sales of certain in dustrial land in industrial estates, parks, and zones 
in Thailand.  By selecting land prices in a country with a comparable per capita GNI and population density and by using prices for comparable types of land ( e.g., industrial zones, allocated versus 
granted land-use rights), the comparison prices reas onably reflected the "prevailing market conditions 
for the good or service in question," while at the same time ensuring that the benefit calculation did 
not contain distortions caused by China' s predominant role in the market.   
 
V. COMMERCE WAS NOT REQUIRED TO PROVIDE A CREDIT IN THE BENEFIT 
CALCULATIONS FOR INSTANCES IN WHICH CHINA PROVIDED RUBBER 
PRODUCTS FOR ADEQUATE REMUNERATION IN THE OTR TIRES  CVD 
INVESTIGATION  
 
24. Commerce was under no obligation to provide a cr edit in its benefit calculations for instances 
in which China provided rubber for adequate remuneration, i.e., when China did not provide a 
subsidy, in the OTR Tires  CVD investigation.  China's argument to the contrary is based on a 
misreading of the SCM Agreement and the GATT 1994, coupled with a misapplication of the 
reasoning in Appellate Body reports.   25. Article 14 of the SCM Agreement provides investigating authorities flexibility in the 
methodology applied to calculate the benefit of a s ubsidy.  Article 14 does not prescribe any particular 
level of aggregation at which the calculation of subsidy benefit must be conducted, but instead 
permits investigating authorities to apply methodologi es that account for different factual situations 
and the conditions under which the subsidy was provi ded.  Additionally, the text of Article 14 
explicitly pertains to the calculation of the "benefit" to the recipient.  The concept of "benefit" relates 
only to situations in which a firm receives a "favour able or helpful factor or circumstance" or "an  WT/DS379/R 
 Page A-15 
 
 
advantage," rather than a detriment or disadvant age.  Article 14 imposes no obligation on Members to 
conduct an "aggregate" analysis nor to provide credit in the benefit calculation when a government provides goods for adequate remuneration.  Indeed, China does not argue that such a requirement is 
even contained in Article 14.   
26. Rather, China argues that the use of the term  "product" in Article VI:3 of the GATT 1994 and 
Articles 10, 19.3, and 19.4 of the SCM Agreemen t required Commerce to provide a credit in the 
benefit calculation for those instances in which China sold rubber for adequate remuneration.  China 
mistakenly relies on the Appellate Body's zeroing repor ts to support its argument.  However, the legal 
provisions on which those decisions are based apply solely to AD determinations and do not apply to 
CVD determinations.  Accepting China's argument would mean that the mere use of the term 
"product" in other provisions of the SCM Agre ement and the GATT 1994 overrides the "latitude" and 
"leeway" that panels and the Appella te Body have found in the guidelin es set forth in Article 14 of the 
SCM Agreement.  
27. Moreover, China's argument cannot be reconcile d with the definition of a subsidy in Article 1 
of the SCM Agreement.  Any time a government pr ovides a financial contribution and a benefit is 
thereby conferred, a subsidy is "deemed to exis t."  Instances of non-subsidies cannot eliminate or 
diminish the benefits conferred when a govern ment provides a financial contribution.   
 28. In addition, China ignores the troubling implica tions of its argument.  If China's interpretation 
were accepted, it would necessarily apply to all of Article 14 and would require that credit be 
provided whenever an investigating authority foun d that a financial contribution did not provide a 
benefit.  Thus, Members would be required to prov ide credit across different types of input products 
and even different types of subsidies.  China's in terpretation would result in a benefit calculation that 
is artificially low, or even zero, preventing th e United States from fully offsetting the effect of 
subsidies found to exist.  China's interpretation of Artic le 14 thus fails to read that article in light of 
the object and purpose of the SCM Agreement, and fo r that reason as well, China's interpretation must 
be rejected.  
VI. COMMERCE PROPERLY MEASURED THE BENEFIT CONFERRED UPON 
PRODUCERS OF SUBJECT MERCHANDISE IN INSTANCES WHERE 
PRODUCTION INPUTS WERE PURCHASED FROM TRADING COMPANIES  
 
29. China fails to identify any provision of the SCM Agreement or GATT 1994 with which Commerce's benefit determinations  are purportedly inconsistent.  China merely asserts that 
Commerce was required to determine the benefit conferred upon trading companies engaged in 
buying and selling an input product, in addition to determining the benef it conferred upon producers 
of the merchandise that was the subject of Commerce's CVD investigations.  However, it was not necessary to measure any benefit that may have b een received by the trading companies.  The amount 
or portion of any benefit receive d by the trading companies is irrelevant for the purpose of 
determining the benefit conferred upon the subject merchandise producers.  
 
30. To the extent that a trading company may have received a benefit from the financial 
contribution provided by an SOE, and some portion of  the benefit of that financial contribution, in 
effect, passed through the trading company to  a producer of subject merchandise, Commerce 
accounted for this and properly calculated the be nefit conferred upon the producer of subject 
merchandise.  To do so, Commerce compared the pr ice the producer of subject merchandise paid for 
the input product with an appropriate benchmark pr ice.  As a result, Commerce's analysis identified 
only the amount of benefit that effectively "passed through" the trading companies and was conferred 
upon producers of subject merchandise.   WT/DS379/R 
Page A-16  
 
VII. COMMERCE'S SPECIFICITY DETERMINATIONS IN THE OTR TIRES  AND LWS  
CVD INVESTIGATIONS WERE CONSISTENT WITH ARTICLE 2 OF THE SCM AGREEMENT  
 
31. China challenges Commerce's specificity determ ination for policy lending with respect to the 
OTR Tires CVD investigation, though not with respect to the other CVD investigations in which 
Commerce made similar specificity findings for similar policy lending subsidies.  Commerce found 
policy lending in the OTR Tires CVD investigation specific because the loans were provided as part 
of government programmes guiding financial institutions  to lend to tire producers.  This finding was 
based on evidence in the record of the OTR Tires CVD investigation, which contains central, 
provincial, and municipal-level government plan s and policies that guided lending to a group of 
industries, including the tire industry.   32. China argues that none of the measures re lied upon by Commerce "defines a subsidy," none 
of the measures "explicitly limits" access to the subsid y to "certain enterprises," and none of the loans 
were "made pursuant to the measures" identified by  Commerce.  The three points that China asks the 
Panel to examine are not the elements that Article 2.1(a) of the SCM Agreement contains, and on that 
basis alone, China's argumentation should be rejected.   33. Article 2.1(a) of the SCM Agreement requi res an investigating authority to determine 
whether:  (i) the granting authority explicitly limits ac cess to a subsidy to "certain enterprises;" or (ii) 
the legislation pursuant to which the granting author ity operates explicitly limits  access to a subsidy to 
"certain enterprises."  Nothing in Article 2.1(a) re quires Members to identify legislation that defines 
the elements of a subsidy ( i.e., financial contribution and benefit).   
 34. The central, provincial, and municipal policy documents each clearly substantiate that the 
various levels of govern ment guided lending to a group  of industries, which included the OTR tire 
industry.  The policies focus on stimulating the quantit y of credit, or the availability of credit at all, 
rather than reducing the price of credit.  The polic ies target certain industries for the direction of 
credit, and prohibit credit to other industries.  Article 2.1 of the SCM Agreement defines "certain 
enterprises" to include a group of industries and permits a specificity determination based on a 
subsidy that is specific to a group of industries.    
 
35. Evidence on the record of the OTR Tires CVD investigation showed that the SOCBs acted 
pursuant to the central, regional, and municipal government policies in making their lending decisions.  Thus, contrary to China's arguments, Commerce correctly determined that SOCBs do, in 
fact, act pursuant to industrial policies in making loans. 
 
36. China also challenges Commerce's specificity  determination for land-use rights in the LWS 
CVD investigation.  Pursuant to Article 2.2 of the SCM Agreement, a subsidy is specific if it is 
limited to certain enterprises located  within a designated geographical region within the jurisdiction of 
the granting authority.  Commerce determined th at Huantai County created New Century Industry 
Park for the purpose of providing selected companies, including Aifudi, with land-use rights.  Thus, 
Huantai County limited this land-use rights subsidy to  enterprises located in a designated geographical 
region.    37. New Century Industry Park meets the ordinary meaning of a designated geographical region.  There is no basis in the SCM Agreement for the na rrower definition for which China argues, and, in 
any event, the New Century Industry Park meets th e requirements of China's narrower definition. 
 38. China argues that if a subsidy is available to all enterprises within a designated geographical 
region, it is not specific pursuant to Article 2.2 of  the SCM Agreement.  Following China's reasoning, 
the only difference between Articles 2.1(a) and 2.2 of the SCM Agreement is that, pursuant to the 
latter, the "certain enterprises" to which a subsidy is explicitly limited happen to be located within a  WT/DS379/R 
 Page A-17 
 
 
designated geographical region within the jurisdiction of the granting authority.  However, even if 
they were not located within a designated geograp hical region, the subsidy granted to them would 
nevertheless be specific pursuant to Article 2.1(a)  by virtue of the explicit limitation.  China's 
interpretation of Article 2.2 would render that pr ovision redundant, which is incompatible with the 
rules of treaty interpretation.  Furthermore, China's interpretation of Article 2.2 is also contrary to 
Article 8.1(b) and 8.2(b) of the SCM Agreement.  
 39. As demonstrated in the record, the land-use ri ghts subsidy at issue was used as an incentive to 
relocate producers to the New Century Industry Park and was tied to the level of investment within 
the park.  Therefore, the subsidy is unique and only availa ble to enterprises investing within the park.  
The fact that Huantai County granted other types of land-use rights to other leaseholders for other 
purposes outside the industrial park is irrelevant to determining whether the particular subsidy at issue 
was only accessible to enterprises within the industria l park.  Interpreting Article 2.2 of the SCM 
Agreement as requiring an investigating authority to  find that the benefit was not available to any 
enterprise outside of the designated geographical re gion would be too restrictive and would enable 
circumvention of the subsidies disciplines.   
 
VIII. THE UNITED STATES DID NOT ACT INCONSISTENTLY WITH THE SCM 
AGREEMENT OR THE GATT 1994 IN TH E CONCURRENT APPLICATION OF 
CVD AND AD MEASURES TO CERTAIN PRODUCTS FROM CHINA 
 40. The WTO agreements and th eir predecessors have always recognized that the dumping and 
subsidization of imports are distinct unfair trad e practices, to which, where they cause injury, 
Members are entitled to apply separate remedies.  Be ginning with the signing of the GATT in 1947, 
separate rules have generally gove rned the conduct of AD and CVD proceedings.  The separate nature 
of the two remedies was recognized  in the separate Tokyo Round AD Code and Subsidies Code, and 
subsequently in the Uruguay Round AD Agreement and SCM Agreement.  
 41. The GATT Contracting Parties reinforced the separate nature of the remedies available from 
AD and CVD proceedings by pr oviding for only one instance  – set forth in Article VI:5 of the GATT 
1994  – in which both remedies may not be applied to th e full amount provided for in Article VI of the 
GATT 1994.  As the only provision linking the reme dy in an AD proceeding with the remedy in a 
CVD proceeding, Article VI:5 reveals that Member s considered when it would be appropriate to 
constrain Members' resort to the concurrent app lication of AD and CVD remedies, and agreed that it 
would be appropriate only where imposing AD duties together with CVDs would compensate for "the 
same situation of dumping or export subsidization."      
42. Article 15 of the Tokyo Round Subsidies Code provides further evidence that parties to the 
Code considered that no other provision in th e GATT 1947 contained such a requirement.  The 
addition of Article 15 would not have been necessary if there had been any other restriction on the 
concurrent application of AD and CVD measures to exports from non-market economy (NME) countries.  The disappearance of that provision in the successor SCM Agreement reinforces the 
presumption, created by the express limitation in Article VI:5 itself, that WTO Members never agreed 
on such a prohibition.  
 43. China's Accession Protocol makes clear that  Members, including China, contemplated the 
concurrent application of CVD and AD measures to  China, in full, notwithstanding China's continued 
treatment as a non-market economy country.  In pa ragraph 15(a) of its Accession Protocol, China 
agreed that Members, when determining price comparability in AD proceedings involving imports 
from China, have the right to u se special measurement methodologies that are not based on a strict 
comparison with domestic prices or costs in China.  In other words, Members may apply AD duties to 
offset the full dumping margins, while treatin g China as a non-market economy country.  
Paragraph 15(b) makes clear that Members also ha ve the right to apply the WTO's CVD rules to WT/DS379/R 
Page A-18  
 
imports from China.  Nothing in paragraph 15 limit s a Member's right to c oncurrently apply both 
remedies.   44. China argues that the AD duties imposed by  Commerce are, in fact, really CVDs, and 
therefore the duties should be added together when examining their consistency with the provisions of 
the SCM Agreement that limit the level of CVDs th at may be imposed.  Based on this theory, China 
argues that the United States acted inconsistently (i ) with Article 19.4 of the SCM Agreement because 
the AD duties and CVDs, taken together, are in exce ss of the amount of subsidy found to exist, and 
(ii) with Article 19.3 of the SCM Agreement becau se the AD duties and CVDs, taken together, are in 
excess of the "appropriate amounts" of the CVDs.  However, the GATT 1994 and the SCM 
Agreement define a CVD as a duty "levied for the pur pose of offsetting" any subsidy.  The AD duties 
calculated on the basis of Commerce's non-market  methodology cannot be e quated with CVDs, as 
China suggests, because the AD du ties are levied to offset dumping of imported products that have 
caused injury.  Commerce's use of the methodolog y expressly provided for in China's Accession 
Protocol to calculate dumping margins in the inv estigations at issue does not somehow transform the 
AD duty  itself into a CVD.  China does not contest th e fact that the duties imposed pursuant to the 
four CVD investigations at issue in this dispute are themselves not in excess of the levels permitted 
under Articles 19.3 and 19.4.  45. In respect of Article I:1 of the GATT 1994, the United States notes, as a threshold matter, that 
China makes "as such" and "as applie d" claims of inconsistency.  With regard to the "as applied" 
claims, China has failed to substantiate this clai m because it has not identified "like products" 
to which the alleged "advantage" is applied.  In any event, with respect to the two aspects of the 
calculation of the dumping margin discussed by China, Commerce treats products from China no 
differently than it treats products from other Me mbers.  Just as it would in an AD proceeding 
involving a product from a market economy, Commerc e did not deduct CVDs in calculating the 
export price of a product in any of the four AD proceedings at issue in this dispute.  Similarly, 
Commerce did not add the amount of subsidies actua lly received to the cost of production of any 
Chinese producer in the four AD investiga tions at issue in this dispute.   
 46. Moreover, China fails to recognize that a number of WTO rules explicitly recognize that, in the context of AD and CVD proceedings, a Memb er may—and in some circumstances must—accord 
certain treatment to products from one Member that may not be accorded to like products from 
another Member.  These include Paragraph 2 of the Ad Note to Article VI:1 of the GATT 1994, 
Article 2.2 of the AD Agreement, Article 14(d) of  the SCM Agreement, and paragraph 15 of China's 
Protocol.  Given the explicit authorization for such actions, it is clear that, as in the present dispute, 
these actions, where they conform to the requirements of these other WTO provisions, are not 
inconsistent with Article I:1.  
 47. Finally, China has failed to demonstrate the theoretical premise of each of its "as such" and 
"as applied" claims, namely, that a so-called double remedy inheres  in the concurrent application of 
AD duties calculated using a methodology not based on a strict comparison of domestic costs and prices in China and CVDs.  For example, first, Ch ina's theory fails to account for the fact that 
subsidies may easily reduce the normal value de termined pursuant to the NME methodology by 
reducing the quantity of factors consumed by the NME producer in manufacturing the product at 
issue.  Under Commerce's methodology, multiplying the surrogate factor values by lower factor 
quantities results in lower normal values and, hence,  lower dumping margins.  Second, one of the 
premises underlying China's argu ment–that subsidies reduce costs pro rata –is unsubstantiated and 
inconsistent with how many subsidies may be offere d and used in the real world.  Other weaknesses 
in China's theory reinforce the failed premise of its claims.   WT/DS379/R 
 Page A-19 
 
 
 
IX. THE UNITED STATES REMAINED AVAILABLE FOR CONSULTATIONS WITH 
THE GOVERNMENT OF CHINA BEFORE INITIATION AND THROUGHOUT EACH INVESTIGATION, AND AFFORDED INTERESTED PARTIES AMPLE TIME AND NUMEROUS OPPORTUNITIES TO SUBMIT RELEVANT 
INFORMATION IN THE INVESTIGATIONS  
 
48. China claims that the United States did not co mply with its obligati on under Article 13.1 of 
the SCM Agreement because the United States did not fo rmally invite China for consultations before 
examining, within the same investigation, informa tion received about new subsidies that had not been 
identified in the application under Article 11.  Contrary to China's reading, the only "investigation" 
referred to in Article 13.1 is the investigation trigge red by the filing of a duly substantiated application 
as provided for in Article 11, and not by the filing of information on newly-reported subsidies.  This is 
confirmed by additional provisions in the SCM Agreem ent that clarify that the procedural focus for 
purposes of consultations is whether the investigation covers a product that is alleged to have been 
subsidized and imports of which are causing injury, so that the examination of additional subsidies on 
a product already subject to investigation w ould not constitute a new "investigation."   
 49. China similarly argues that the United Stat es did not comply with its obligation under 
Article 12.1.1 of the SCM Agreement by failing to  provide 30 days for reply not only to the 
questionnaire issued at the outset of an investiga tion, but to subsequent requests for information as 
well.  Understood in its proper context, including Annex VI of the SCM Agreement, the obligation in 
Article 12.1.1 to provide thirty days for reply appli es only to the former, and not  to the latter.  China's 
reliance on the Appellate Body's statement in Mexico – Rice that Article 12 of the SCM Agreement 
"as a whole" provides for evidentiary rules and due process rights that apply "throughout" an investigation is misplaced.  Not only does this statement fail to address the particular text of 
Article 12.1.1, but China's argument overl ooks the Appellate Body's recognition in US – Hot-Rolled 
Steel  that Article 6.1.1, a parallel provision in the AD Agreement, "prescribes an absolute minimum 
of 30 days for the initial response to a questionnaire ." 
 50. China argues that, by failing to request certa in necessary information from respondents in the 
CWP and LWRP CVD investigations and consequently relying on facts available, the United States 
acted inconsistently with Articles 12.1 and 12.7 of th e SCM Agreement.  It was not until a very late 
stage in these investigations that  Commerce was made aware that information about the amount of 
steel purchased through trading companies that  came from SOEs was necessary to determine the 
existence of a benefit conferred on producers of the product subject to investigation.  Commerce 
relied on evidence from the records of  the investigations in order to make these determinations.  
Before any definitive rate of CV D is levied, respondents in the CWP and LWRP CVD investigations 
would be provided the opportunity to present eviden ce with respect to the amount of hot-rolled steel 
purchased from trading companies that was produced through SOEs.  
X. CONCLUSION  
 51. For the foregoing reasons, the United States resp ectfully requests that the Panel grant the U.S. 
requests for a preliminary ruling and reject the remainder of China's claims.  WT/DS379/R 
Page A-20  
 
 
ANNEX A-3 
  
RESPONSE OF CHINA TO THE U.S. REQUEST  
FOR PRELIMINARY RULINGS 
 
 
(12 June 2009) 
 
 
  
TABLE OF CONTENTS 
Page
  
I. BACKGROUND.................................................................................................................. ...22 
 II. THE FAILURE OF THE UNITED STATES TO PROVIDE LEGAL   AUTHORITY FOR COMMERCE TO AVOID THE IMPOSITION OF   DOUBLE REMEDIES IS A SPECIFIC MEASURE AT ISSUE IN THIS 
 DISPUTE ...................................................................................................................... .........24 
 
A. THE UNITED STATES' ARGUMENT IS PREMISED ON A   MISCHARACTERIZATION OF CHINA'S CLAIMS CONCERNING THE   ISSUE OF DOUBLE REMEDIES ........................................................................................ 25 
 
B. CHINA'S DESCRIPTION OF THE ABSENCE OF LEGAL AUTHORITY   PRESENTS THE PROBLEM CLEARLY .............................................................................25  
III. THE ADDITIONAL MEASURE IDENTIFIED BY CHINA IN ITS PANEL  
 REQUEST IS WITHIN THE TERMS OF REFERENCE................................................27 
 
IV. CONCLUSION ................................................................................................................ ......30  
  WT/DS379/R 
 Page A-21 
 
 
TABLE OF REPORTS CITED  IN THIS SUBMISSION  
 
 
 
Short Title   
Full Report Title and Citation  
Brazil – Aircraft  Appellate Body Report, Brazil – Export Financing Programme for Aircraft ,
WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, 1161  
Canada – Aircraft  Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft ,
WT/DS70/R, adopted 20 August 1999, as upheld by Appellate Body Report 
WT/DS70/AB/R, DSR 1999:IV, 1443  
Columbia – Ports of Entry  Panel Report, Colombia - Indicative Prices and Restrictions on Ports of Entry ,
WT/DS366/R, circulated to WTO members on 27 April 2009  
EC – Customs Matters  Appellate Body Report, European Communities - Selected Customs 
Matters , WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, 
3791Korea – Dairy  Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, DSR 
2000:I, 3  
US – Continued Zeroing  Appellate Body Report, United States – Continued Existence and Application 
 of Zeroing Methodology , WT/DS350/AB/R, circulated to WTO Members on 
 4 February 2009 
US – Continued Zeroing  Panel Report, United States – Continued Existence and Application of Zeroing
Methodology , WT/DS350/R, circulated to WTO Members 1 October 2008  
US – Corrosion-Resistant  
Steel Sunset Review  Appellate Body Report, United States – Sunset Review of Anti-Dumping Dutie s
on Corrosion-Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3  
US – Customs Bond Directive  
(India)  Appellate Body Report, United States – Customs Bond Directive for
Merchandise Subject to Anti-dumping/Countervailing Duties , 
WT/DS345/AB/R, ado pted 1 Augus t2008
US – Gambling  Appellate Body Report, United States – Measures Affecting the Cross-Border  
Supply of Gambling and Betting Services , WT/DS285/AB/R, adopted 
20 April 2005, DSR 2005:XII, 5663 (Corr.1, DSR 2006:XII, 5475) 
US – Upland Cotton  Appellate Body Report, United States – Subsidies on Upland Cotton , 
WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, 3  
 
 WT/DS379/R 
Page A-22  
 
1. In accordance with paragra ph 12 of the Panel's working procedures for this dispute, China 
hereby responds to the request by the United States for certain preliminary ruli ngs, as set forth in the 
United States' first written submission to the Panel.  2. The requests for preliminary rulings by the Un ited States relate to the identification by China 
in its panel request of a specific measure, namely, th e failure of the United States to provide the U.S. 
Department of Commerce ("Commerce") with le gal authority to avoid the imposition of a double 
remedy for the same alleged subsidies when it imposes anti-dumping duties determined pursuant to 
the U.S. non-market economy ("NME") methodol ogy simultaneously with the imposition of 
countervailing duties on the same product.  The United States contends that this is not a "specific 
measure at issue" within the meaning of Article 6.2 of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes ("DSU"), and is outside the Panel's terms of reference because it 
was not identified in China's request for consulta tions under Article 4 of the DSU.  As China will 
demonstrate, both of these requests for preliminar y rulings are unfounded and should be rejected. 
 
3. Before turning to the merits of the U.S. re quests for preliminary rulings, China considers that 
it is important to place the U.S. arguments in thei r proper context.  As China will demonstrate, from 
the very beginning of its consideration of whethe r to apply the U.S. countervailing duty laws to 
imports from countries that it designates as NMEs, Commerce has been vague and evasive as to 
whether it possesses legal authority to address the ques tion of double remedies.  The United States has 
continued to pursue this strategy of obfuscation into the present dispute, refusing to identify in its first 
submission to the Panel whether Commerce has legal authority to avoid the imposition of double 
remedies that arise from the simultaneous app lication of countervailing duties and its NME 
methodology, and what the nature and exte nt of that legal authority might be. 
 
4. Against this backdrop, it is surprising that the United States should now accuse China of an 
alleged lack of clarity in specifying the measures  at issue in this dispute.  Not only are these 
accusations legally baseless, but they fail to refl ect the fact that it is the United States' own conduct 
that is the origin of whatever uncertainty exists as to the provisions of U.S. law – or their absence – 
that relate to the problem of double remedies.  Ha ving refused to provide any indication to respondent 
producers, the Government of China, and now this Panel of the legal framework in which Commerce would address the double remedy problem – a probl em that Commerce has acknowledged to exist and 
claims to be "determined to prevent … from arising"
1 – the United States simply is not in a position to 
fault China for the manner in which it has chosen to  define the measures at issue in this dispute. 
 I. BACKGROUND  
 
5. Beginning with its anti-dumping and countervailing duty investigations of Coated Free Sheet 
Paper ("CFS Paper "), Commerce has recognized the problem of double remedies that arises from 
simultaneous AD and CVD investigations of imports from NME countries.  In March 2007, 
Commerce issued a press release to  accompany its preliminary dete rmination in the countervailing 
duty investigation of CFS Paper, in which Commerce stated that "the possibility of double counting 
result[s] from simultaneous anti-dumping and counte rvailing duty investigations" of imports from 
NME countries.
2   In June 2007, Commerce released its prel iminary determination in the parallel anti-
dumping investigation of CFS Paper .  There, it stated that "the question of whether a double remedy 
has been or could be applied, or whether the Department has the authority to adjust for such a 
situation , involves complex factual, methodological and legal  issues that will require additional time 
                                                      
1 CFS Paper I&D Memo (AD), p. 13 (CHI-94). 
2 U.S. Department of Commerce, Office of Public Affairs, "Commerce Applies Anti- Subsidy Law to 
China", press release dated 30 March 2007 (CHI-135) (emphasis added).  In an official Department of 
Commerce newsletter published the next month, Commerce reiterated that "[a] possibility of double counting results from simultaneous antidumping and CVD investigations" of imports from NME countries.  U.S. 
Department of Commerce, International Trade Administration, International Trade Update , April 2007, p. 4 
(CHI-136).  WT/DS379/R 
 Page A-23 
 
 
to analyze."3   Commerce stated that it would "analyze comme nts regarding the double remedy that are 
submitted by interested parties during the course of this investigation, and may seek additional 
information on the topic."4  
 6. Commerce's statements in connection with CFS Paper unambiguously acknowledge that "[a] 
possibility of double counting results from simult aneous antidumping and CVD investigations" of 
imports from countries that Commerce designates as NM Es and that "whether the Department has the 
authority to adjust for such a situation, involves complex … legal issues".  Commerce also made clear 
that it would "have to respond" to issues and evid ence that interested parties identified during the 
course of the investigations concerning the existe nce and extent of a double remedy for the same 
alleged acts of subsidization.
5 
 7. Notwithstanding Commerce's clear recognitio n of the problem of double remedies, and 
notwithstanding its concession in the CFS Paper preliminary determination regarding the uncertain 
nature of its legal authority to address the pr oblem, Commerce never identified for the interested 
parties in the CFS Paper investigations: (1) the legal framew ork in which it would evaluate the 
unidentified "specific facts" it considered relevant  to determine whether a double remedy would arise; 
or (2) the specific steps it would take within that  legal framework to avoid the imposition of a double 
remedy.  8. As China documented in its first written submis sion to the Panel, to this day Commerce still 
has not identified the legal framework in which it would analyze the double remedy issue. Beginning 
with the final determinations in CFS Paper , and continuing into the investigations at issue in this 
dispute, Commerce has adopted an internally contradictory, two-pronged position on the question of double remedies.  As China explained in its submissi on, Commerce has (1) proclaimed that it has no 
legal authority to address the problem of double reme dies in the context of NME investigations; while 
(2) blaming the respondents for allegedly failing to present "data" or "evidence" relevant to the 
question of double remedies, even though Commerce has never identified what this "data" or 
"evidence" might be.
6 
 9. Remarkably, the United States has continued to  pursue this strategy of evasion in its first 
submission to the Panel.  China has plainly challe nged the United States in this dispute to identify 
whether Commerce has legal authority to address th e imposition of double remedies, what the nature 
of this authority might be, what types of evidence are required within this legal framework, and why 
this evidence is relevant to the ex istence or extent of a double remedy.  In its first written submission 
to the Panel, the United States says literally nothing in response.  In fact, the United States more or 
less abandons Commerce's theory that the releva nt issue is whether "subsidies pass through, pro rata , 
to U.S. prices", leaving China – and now the Panel – even more in the dark as to when the 
United States considers that a double remedy would arise, and under what legal authority it would fulfil its "determin[ation] to prevent any doubl e remedies from arising" in these unspecified 
circumstances.
7 
                                                      
3 Preliminary Determination of Sales at Less Th an Fair Value and Postponement of Final 
Determination: Coated Free Sheet Paper from the People 's Republic of China, 72 Fed. Reg. 30758, 30760 
(4 June 2007) (CHI-137) (emphasis added). 
4 Preliminary Determination of Sales at Less Th an Fair Value and Postponement of Final 
Determination: Coated Free Sheet Paper from the People's Republic of China, 72 Fed. Reg. 30758, 30760 
(4 June 2007) (CHI-137).  
5 U.S. Department of Commerce, Office of Public Affairs, "Commerce Applies Anti- Subsidy Law to 
China", press release dated 30 March 2007 (CHI-135). 
6 See China First Written Submission, paras. 359-361.  
 7 CFS Paper I&D Memo (AD), p. 13 (CHI-94), As Ch ina will demonstrate in its rebuttal submission, 
the United States' attempt to dismiss Commerce's " pro rata " theory as one that the respondents invented is 
patently disingenuous.  See U.S. First Written Submission, n.607. Commerce stated in the OTR AD WT/DS379/R 
Page A-24  
 
 10. As China will proceed to demonstrate, Ch ina has done nothing more than take Commerce's 
own statements at face value for the purpose of de fining the relevant measur es and claims in this 
dispute.  There is no respect in which China's id entification of the absence of legal authority as a 
measure at issue in this dispute failed to comport with the requirements of Article 6.2 of the DSU. 
 
II. THE FAILURE OF THE UNITED STATES TO PROVIDE LEGAL AUTHORITY 
FOR COMMERCE TO AVOID THE IMPOSITION OF DOUBLE REMEDIES IS A SPECIFIC MEASURE AT ISSUE IN THIS DISPUTE  
 
11. In its request for establishment of a panel, China specified as a measure at issue in this 
dispute, as an omission, "the failure of the Unite d States to provide legal authority for the U.S. 
Department of Commerce to avoid the imposition of a double remedy when it imposes anti- dumping 
duties determined pursuant to the U.S. NME me thodology simultaneously with the imposition of 
countervailing duties on the same product."
8   The United States contends that this is not a "specific 
measure at issue" within the meaning of Article 6. 2 of the DSU.  This contention is entirely without 
basis. 
 
12. The Appellate Body has observed that Artic le 6.2 requires the complaining Member to 
"identify the specific measures at issue" and to "p rovide a brief summary of the legal basis of the 
complaint sufficient to present the problem clearly."9  These requirements serve two purposes. First, 
"as a panel's terms of reference are established by th e claims raised in panel requests, the conditions of 
Article 6.2 serve to define the jurisdiction of the panel."10  Secondly, these requirements "serve the 
due process objective of notifying respondents and potential third parties of the nature of the 
dispute".11 
 13. The Appellate Body has stated that "the identification of a measure within the meaning of Article 6.2 need be framed only with sufficient particularity so as to indicate the nature of the measure 
and the gist of what is at issue."
12  An examination of the sufficiency of a panel request under 
Article 6.2 "does not entail substa ntive consideration as to what typ es of measures are susceptible to 
challenge in WTO dispute settlement."13  The relevant inquiry is whet her the complaining Member 
has "present[ed] the problem clearly" so as to define the scope of the dispute and advise other 
Members as to the nature of the dispute.  
14. As China will proceed to demonstrate, the Un ited States does not even remotely establish that 
China failed to "present the problem clearly" when it identified Commerce's lack of legal authority to 
avoid the imposition of double remedies as a measure at issue in this dispute.  
                                                                                                                                                                    
 
determination, for example, that "[t]he GOC and the responding parties have not demonstrated that a double 
remedy will result from this investigation because they have failed to present any data showing that the 
benefits received from any domestic subsidy lowers U.S. prices, pro rata …"  OTR I&D Memo (AD), p. 12-
13 (emphasis added).  This was Commerce's articulation of what it considered to be the relevant factual issue, 
not the respondents'. 
8 Request for the Establis hment of a Panel by China (WT/DS379/ 2) (12 December 2008), p. 3.  As 
discussed below, this measure follows directly from Commerce's own statements in the final anti-dumping and 
countervailing duty determinations that China also specified as measures at issue in this dispute. 
9 Appellate Body Report, Korea – Dairy, para. 120. 
10 Appellate Body Report, US – Continued Zeroing, para. 161. 
11 Appellate Body Report, US – Continued Zeroing, para. 161. 
12 Appellate Body Report, US – Continued Zeroing, para. 169. 
13 Appellate Body Report, US – Continued Zeroing, para. 169.   WT/DS379/R 
 Page A-25 
 
 
A. THE UNITED STATES' ARGUMENT IS PREMISED ON A MISCHARACTERIZATION 
OF CHINA'S CLAIMS CONCERNING THE ISSUE OF DOUBLE REMEDIES 
 15. The United States' argument concerning the measu re identified by China in its panel request is 
inextricably bound up with its erroneous contentio n that China's claims are based on a "supposed 
requirement in U.S. law to impose a double remedy" ( i.e., to apply concurrent AD and CVD 
measures)".
14  This is a false characterization of China' s claims. Contrary to the United States' 
argument, China's complaint does not relate to any provision of U.S. law that requires  Commerce to 
apply countervailing duties concurrently with anti- dumping duties determined in accordance with its 
NME methodology.  Any such claim would be absurd in light of Commerce's two-decade long history 
of taking the position that it could not apply the U.S. countervailing duty  laws concurrently with its 
NME anti-dumping methodology.  16. Contrary to the United States' attempt to re-c haracterize China's claims, China's contention is 
that when
 Commerce chooses  to apply countervailing duties concu rrently with anti- dumping duties 
determined in accordance with its NME methodology, as it has done in the four investigations at issue 
in this dispute, a necessary consequence of that  choice is the imposition of a double remedy for the 
same alleged acts of subsidization.  This is becau se, as Commerce itself has stated, it lacks authority 
under U.S. law to account for the double remedies that  arise in these circumstances, and therefore has 
"no choice but to apply both duties without making any adjustments" for double remedies.15  The 
double remedy arises as a necessary result of the opera tion of the two remedies whenever they are 
used in conjunction with each other, not from any "requirement" of U.S. law to impose double 
remedies or to apply the two remedies concurrently.  17. This is precisely why it is the absence of legal authority to avoid the imposition of double 
remedies that is the gravamen of China's compla int.  As China documented in its first written 
submission to the Panel, and as discussed in more  detail below, the United States – including 
Commerce – has repeatedly recogn ized the problem of double remedi es arising from the simultaneous 
application of countervailing duties and its NME methodology.  While China and the United States appear to differ on the circumstances in which a do uble remedy will arise, the existence of the double 
remedy problem cannot seriously be in doubt.  Comme rce has repeatedly invoked the absence of legal 
authority as a reason why it cannot take steps to avoid the imposition of double remedies in the case 
of parallel AD/CVD investigations of imports from NME countries.  Clearly, then, it is the absence of 
legal authority to avoid the imposition of double  remedies that is among the sources of China's 
complaint.
16 
 18. Accordingly, the only remaining question unde r Article 6.2 of the DSU is whether China has 
"present[ed] the problem clearly".  As China will demonstrate next, its request for establishment of a 
panel easily meets that test.  B. CHINA'S DESCRIPTION OF THE ABSENCE OF LEGAL AUTHORITY PRESENTS THE 
PROBLEM CLEARLY 
 
19. The omission that China has identified in its request for establishment of a panel is the failure 
of the United States to give Commerce legal author ity to avoid the imposition of double remedies for 
                                                     
 
14 U.S. First Written Submission, para. 70. 
15 GAO Report, p. 29 (CHI-121).  
 16 The Appellate Body has stated that "a 'nexus' mu st exist between the resp onding Member and the 
'measure', such that the 'measure' – whether an act or omis sion – must be 'attributable' to that Member", and "the 
'measure' must be the source of the alleged impairment …".  Appellate Body Report, US – Gambling, para. 121 
(emphasis original).  Based on Commerce's own words and actions, it is clear that the absence of legal authority 
– an omission – is the source of the impairment of which China complains in this dispute in respect of double 
remedies. WT/DS379/R 
Page A-26  
 
the same alleged subsidies in those instances in which Commerce applies countervailing duties 
simultaneously with the application of anti-dumpi ng duties determined in accordance with its NME 
methodology.  In the investigations at issue in th is dispute, Commerce identified this lack of legal 
authority as at least one justification for its failure to avoid the imposition of double remedies for the same alleged subsidies. 
 
20. While "an examination regarding the specificity  of a panel request does not entail substantive 
consideration as to what types of measures are su sceptible to challenge in WTO dispute settlement"
17 , 
there is no question that China may properly cha llenge under the DSU the absence of legal authority 
for Commerce to avoid the imposition of double re medies in parallel AD/CVD investigations of 
imports from NME countries.  The Appellate Body has repeatedly stated that "[i]n principle, any act 
or omission attributable to a WTO Member can be a measure of that Member for purposes of dispute 
settlement proceedings."18  The failure of a Member to enact legislation that would permit its 
investigating authority to avoid acting inconsistently  with the covered agreements is certainly a type 
of "omission" that is cognizable within WTO dispute settlement. 
 
21. In its first written submission to the Panel,  China has exhaustively documented the facts and 
circumstances that demonstrate this omission by the United States.  In particular, China has 
demonstrated that:  
• The U.S. Government Accountability Office ("GAO") found that "U.S. law does not provide 
Commerce with any specific authority to avoid double counting" when it imposes 
countervailing duties simultaneously with anti-  dumping duties determined in accordance 
with its NME methodology; 
 
• The Department of Commerce informed the GAO that, for this reason, Commerce "would 
have no choice but to apply both duties without making any adjustments" for double remedies; 
 
• The GAO recommended that the U.S. Congress "consider adopting legislation to provide 
Commerce clear authority to … make correcti ons to avoid double counting domestic subsidy 
benefits when applying both CVDs and antidumping duties to the same products from NME countries …"; 
 
• The U.S. House of Representatives did, in fact, pass a bill that would have given Commerce 
authority to avoid the imposition of double remedies in the case of imports from NME 
countries, but this bill was never enacted into U.S. law; and 
 
• In CFS Paper , and continuing into the investigations at issue in this dispute, Commerce 
repeatedly referred to the absence of legal aut hority as a reason why it could not take steps to 
avoid the imposition of double remedi es for the same alleged subsidies.
19 
 
22. The fact that the U.S. House of Representa tives considered it necessary to pass a bill that 
would have given Commerce the authority to avoid double remedies in the ca se of parallel AD/CVD 
investigations of NME imports is strongly indica tive of the possibility that Commerce lacks such 
authority.  The fact that this bill never became a law is even more indicativ e of the possibility that 
Commerce continues to lack such authority, and that this l ack of authority explains its failure to 
account for double remedies in the investigations at issue in this dispute.  Most importantly, the fact 
                                                      
17 Appellate Body Report, US – Continued Zeroing, para. 169. 
18 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 81 (emphasis added); 
see also Appellate Body Report, EC – Customs Matters, para. 133; Appellate Body Report, US – Continued 
Zeroing, para. 176. 
19 See China First Written Submission, paras. 357-359.   WT/DS379/R 
 Page A-27 
 
 
that Commerce invoked the absence of legal authority in these investigations as a justification for its 
inaction confirms that it is, in fact, the absence of legal authority that is the origin of the 
impermissible double remedies of which China complains.  23. In sum, it is hard to imagine how China coul d have been any more precise in describing and 
documenting: (1) the omission of the United States in failing to provide legal authority for Commerce 
to avoid the imposition of double remedies when it imposes anti-dumping duties determined pursuant 
to the U.S. NME methodology simultaneously with  the imposition of countervailing duties; and (2) 
the relationship between this omission and the legal cl aims that China advances in this dispute.  China 
has clearly demonstrated, based on Commerce's own wo rds, that the absence of legal authority is one 
possible explanation for Commerce's imposition of doubl e remedies in the investigations at issue, and 
has further demonstrated that this imposition of double remedies for the same alleged subsidies 
impairs benefits that accrue to China under the covered agreements. 
 24. In light of these considerations, it is difficu lt to understand the basis for the United States' 
suggestion that China's request for establishment of a panel failed to "present the problem clearly" for 
the purposes of Article 6.2 of the DSU.
20  There can be no doubt that China's panel request goes well 
beyond the minimal requirement of identifying the rele vant measures "with sufficient particularity so 
as to indicate the nature of the measure and the gist of what is at issue".21  The "gist of what is at 
issue" is whether Commerce has authority under U.S. law to avoid the problem of double remedies in parallel AD/CVD investigations of NME imports – a problem that Commerce itself has acknowledged 
and purports to be determined to prevent.  
25. Moreover, the United States has not even suggest ed, let alone demonstrated, that its ability to 
defend its interests in this dispute has been impaired  by the manner in which China chose to define the 
measure at issue.  There is no plausible prejudice to  the United States arising from the identification as 
a measure of a legal deficiency that has been th e subject of extensive discussion within the U.S. 
Government, and that Commerce specifically identified in the investigations at issue.  In point of fact, 
it is entirely within the power of the United Stat es to resolve this matte r by indicating whether 
Commerce does or does not have authority under U.S.  law to avoid the imposition of double remedies 
in parallel AD/CVD investigations of NME imports, and, if Commerce does have such authority, to 
describe what this authority is.  In the absence of any prejudice to the United States, the due process 
concerns of Article 6.2 of the DSU simply are not implicated in this case.  
26. For these reasons, the Panel should reject the United States' claim that the failure to provide 
legal authority is not a specific me asure at issue in this dispute. 
 
III. THE ADDITIONAL MEASURE IDENTIFIED BY CHINA IN ITS PANEL REQUEST 
IS WITHIN THE TERMS OF REFERENCE 
 
27. In its request for preliminary rulings, the Un ited States claims that the one additional measure 
that China set forth in its request for establishment of a panel is outs ide the terms of reference because 
it was not the subject of consultations.  The U.S. argument wholly disregards the direct relationship 
between the one additional measure that China incl uded in its panel request and the measures that 
were the subject of consultations, and ignores the Appellate Body's jurisprudence on the relationship 
between consultations requests and panel requests.  
                                                     
 
20 Indeed, China suspects that the problem is all too clear to the United States – after repeatedly 
acknowledging the problem of double remedies in the context of NME investigations, the United States 
would prefer to avoid any discussion of why it has been unable to specify the legal framework in which it 
would evaluate this issue, or to explain why Commerce failed to avoid the imposition of double remedies in 
the investigations at issue. 
21 Appellate Body Report, US – Continued Zeroing, para. 169.  WT/DS379/R 
Page A-28  
 
28. It is well-established that Articles 4 and 6 of the DSU do not "require a precise and exact 
identity between the specific measures that were the subj ect of consultations and the specific measures 
identified in the request for the establishment of a panel."
22  The Appellate Body has stated that, "[a]s 
long as the complaining party does not expand the scope of the dispute," it would "hesitate to impose too rigid a standard for the 'precise and exact iden tity' between the scope of consultations and the 
request for establishment of a panel, as this would substitute the request for consultations for the panel 
request."
23 
 
29. The Appellate Body recently re-emphasized  this point, explaining that a complaining Member 
may add measures to a panel request so long as the additional measures "relate to essentially the same 
dispute" that was the subject of consultations.24  In evaluating this issue, the Appellate Body 
examined whether the additional measures "relate" to the measures identified in the consultations 
request, and whether the "legal basis" of the claims raised in respect of the additional measures is the 
same as the legal basis of the claims set forth in the consultations request.25 
 
30. The one additional measure that the United St ates challenges in its request for preliminary 
rulings easily satisfies both of these standards, a nd unquestionably "relate[s] to essentially the same 
dispute" as the dispute that was the subject of c onsultations.  The one additional measure that the 
United States challenges states as follows: 
 
In certain of the investigations specified  above, the U.S. Department of Commerce 
stated that U.S. law provides no basis to make any adjustment to either the anti- 
dumping or countervailing duty calculations to avoid the imposition of a double 
remedy for the same unfair trade practic e, where such a double remedy arises from 
the use of the U.S. non-market economy (NME) methodology to impose anti- 
dumping duties simultaneously with the imposition of countervailing duties on the 
same product.  The measures therefore incl ude, as an omission, the failure of the 
United States to provide legal authority for the U.S. Department of Commerce to 
avoid the imposition of a double remedy when it imposes anti-dumping duties determined pursuant to the U.S. NME methodology simultaneously with the 
imposition of countervailing du ties on the same product.
26 
31. This additional measure clearly "relates" to the measures that were the subject of 
consultations.  The paragra ph begins by noting that " in certain of the investigations specified above " – 
i.e., the measures that were the subject of consultations  – Commerce stated that it lacks legal authority 
to avoid the imposition of double remedies in th e context of parallel AD/CVD investigations of 
imports from NME countries. Thus, Commerce's lack  of legal authority to avoid the imposition of 
double remedies in parallel NME investigations was already evident on the face of the measures that 
were the subject of consultations.27  China's panel request does nothing more than identify this 
                                                      
22 Appellate Body Report, Brazil – Aircraft, para. 132 (original emphasis). 
23 Appellate Body Report, US – Upland Cotton, para. 293.  
 24 Appellate Body Report, US – Continued Zeroing, para. 235.  The United States' failure to address 
this recent jurisprudence on the re lationship between consultation reques ts and panel requests is a telling 
omission.  The argument that the United States advances in the present dispute concerning the one additional 
measure that China included in its panel request is at least as tenuous as the argument that the United States 
advanced in US – Continued Zeroing in respect of the 14 additional measures at issue in that dispute.  Both the 
panel and Appellate Body rejected the U.S. argument that the additional measures were outside the terms of 
reference. 
25 Appellate Body Report, US – Continued Zeroing, para. 228. 
 26 Request for the Establishment of a Panel by China (WT/DS379/2) (12 December 2008), p. 3.  
27 See First Written Submission of China, para. 359.  WT/DS379/R 
 Page A-29 
 
 
absence of legal authority as a distinct measure, in the form of an omission by the United States in 
failing to provide Commerce with legal authority to avoid the imposition of double remedies.28 
 32. In its request for preliminary rulings, the Un ited States makes no attempt to demonstrate that 
this one additional measure is unrelated to the measu res that were the subject of consultations.  The 
United States baldly asserts that the additional measure  is "wholly new", but ignores the fact that the 
description of the measure in China's panel request es tablishes a direct connection to the measures that 
were the subject of consultations.
29  The United States likewise disregar ds the fact that China's first 
written submission clearly establishes the relationship between the measures that were the subject of 
consultations and the omission that China specified  as an additional measure in its panel request.30  
The United States simply pretends that Commerce never made the statements that it actually made in 
the underlying determinations.  33. Even if Commerce had not specifically refe rred to the absence of legal authority in the 
underlying determinations, the omission that China h as specified in its panel request relates to the 
measures that were the subject of consultations b ecause the absence of legal authority is one possible 
explanation for Commerce's failure to avoid the impos ition of double remedies in the investigations at 
issue.  China has demonstrated th at there has been extensive consideration by different parts of the 
U.S. Government as to whether Commerce has lega l authority to avoid double remedies in parallel 
NME investigations.
31  That Commerce may lack such authority plainly relates to Commerce's failure 
to avoid the imposition of double remedies in the me asures that were the subject of consultations. 
 
34. It is equally clear that the legal basis for Chin a's claims in respect of the additional measure is 
identical to the legal basis for Ch ina's claims in respect of the me asures that were the subject of 
consultations.  Fundamentally, th e legal issue with respect to all of these measures is whether the 
imposition of double remedies for the same alleged act s of subsidization is inconsistent with the 
covered agreements.  In particular: 
 
• With respect to the measures that were the subj ect of consultations, China's claim is that the 
United States acted inconsistently with speci fied provisions of the covered agreements, 
because it applied both anti-dumping and countervailing duties to the same products without 
                                                      
 28 For this reason, the United States' reliance upon US – Customs Bond Directive (India) (AB) is 
misplaced.  See U.S. First Written Submission, n. 79.  China has not expanded the scope of the dispute to 
include a broader set of legal authorities, as was the case in US – Customs Bond Directive.  It is only by 
mischaracterizing the nature of China's claims that the United States can argue that the additional measure 
identified by China in its panel request "derive[s] from an unspecified set of statutory provisions that … 
operate jointly so as to deprive Commerce of certain legal authority that China believes it should have."  U.S. First Written Submission, para. 84.  As discussed above, this re-characterization of China's claims is entirely 
misguided. China's claims in respect of double remedies do not arise from an "unspecified set of statutory 
provisions"; they arise from Commerce's stated lack of legal authority to avoid the imposition of double remedies when it decides to apply anti-dumping dutie s determined in accordance with its NME methodology 
simultaneously with the imposition of countervailing duties.  This absence of legal authority was evident on 
the face of the determinations that were the subject  of consultations and was specifically invoked by 
Commerce as a rationale for its inaction.  China has iden tified this aspect of Commerce's determinations as a 
distinct measure in its panel request merely to highlight the apparent importance of the absence of legal authority as an explanation for why Commerce failed to avoid the imposition of double remedies in these 
determinations. 
29 U.S. First Written Submission, para. 81.  
30 See, e.g., China First Written Submission, para. 395 ("Commerce stated, unequivocally, that the U.S. 
countervailing duty laws do not give it authority to avoid the imposition of double remedies in this instance.  In 
respect of the U.S. anti-dumping laws , Commerce continued to make statements that are consistent with its 
previous position that it lacks authority to avoid double remedies in NME investigations."). 
31 See China First Written Submission, paras. 347-354.  WT/DS379/R 
Page A-30  
 
accounting for the fact that its anti-dumping me thodology necessarily offset the same alleged 
subsidies for which it imposed countervailing duties. 
 
• With respect to the omission that China iden tified as an additional measure in its panel 
request, China's claim is that the United States act s inconsistently with the identical provisions 
of the covered agreements, because the absen ce of legal authority for Commerce to account 
for double remedies in the context of NME inv estigations ensures that the United States will 
act inconsistently with the same provisions of the covered agreements in all cases in which 
Commerce applies the two remedies simultaneously. 
 35. In short, the legal issues relating to these measures are identical.  Just as the 14 additional 
measures at issue in US – Continued Zeroing concerned the same zeroing methodology that 
Commerce had used in the 38 measures that were the subject of consultations, the measures that 
China identified in its consultations request and th e one additional measure that it identified in its 
panel request relate to the same  basic question: whether the United States may impose countervailing 
duties to offset subsidies that it necessarily offsets through the use of its NME methodology in a 
parallel anti-dumping investigation.  Hence, it is clea r that China's consultations request and its panel 
request refer to the same subject matter and constitu te the same dispute.  China has not expanded the 
scope of this dispute, and therefore the one additi onal measure that China included in its panel request 
is within the terms of reference of this Panel.  36. It is evident from the U.S. submission that its actual grievance is that China has challenged 
"as such" the failure of the United States to prov ide legal authority to Commerce to avoid the 
imposition of double remedies in parallel AD/CVD inv estigations of imports from NME countries.  
The United States appears to suggest that China' s "as such" claims have some bearing upon the 
measures that China was required to id entify in its consultations request.
32  But as the Appellate Body 
has recently observed, "the distinction between 'as such' and 'as applied' claims does not govern the 
definition of a measure for purposes of WTO dispute settlement."33  This distinction is no more than a 
"heuristic device" that provides "an analytical tool  to facilitate the understanding of the nature of a 
measure at issue."34  The fact that China has challenged a measur e "as such" is not relevant to whether 
that measure relates to the dispute that was th e subject of consultations.  As China has just 
demonstrated, the additional measure in its panel request clearly relates to the same dispute that was 
the subject of consultations, and is therefore within the terms of reference without regard to whether 
China raises "as applied" or "as such" claims, or  both, in respect of this additional measure. 
 37. For these reasons, China respectfully requests th e Panel to find that the omission specified by 
China in its panel request is within the Panel's terms of reference. 
 
IV. CONCLUSION  
 
38. As China has demonstrated, the United States h as steadfastly refused to  identify (1) when, if 
ever, it would consider a double remedy to arise; (2 ) the legal authority under which it would evaluate 
the existence and extent of a double remedy; (3) the types of "facts" or "evidence" that would be 
relevant to its analysis; (4) why these "facts" or "e vidence" are relevant to determining the existence 
or extent of a double remedy; (5) the specific step s that it would take to avoid the imposition of 
double remedies, if the relevant "facts" or "evidence"  were presented; and (6) whether it considers that 
                                                     
 
32 U.S. First Written Submission, para. 82. 
 33 Appellate Body Report, US – Continued Zeroing, para. 179. See also Panel Report, US – Continued 
Zeroing, para. 7.46 ("In our view, the distinction between 'as such' and 'as applied' claims does not govern the 
definition of a measure for purposes of WTO dispute settlement, nor is this  distinction intended to replace or 
override the requirements of Article 6.2 of the DSU as to how measures have to be identified in a panel 
request."). 
34 Appellate Body Report, US – Continued Zeroing, para. 179.   WT/DS379/R 
 Page A-31 
 
 
it has any legal obligation, either under U.S. la w or under the covered agreements, to avoid the 
imposition of double remedies in the context of parallel AD/CVD investigations of NME imports.  39. China considers that the United States' request for preliminary rulings is merely a continuation of the U.S. strategy of avoiding any response to these questions.  Ironically, if the 
United States wanted to respond to China's "as su ch" claims with respect to the issue of double 
remedies, it would need to do nothing more than  identify the specific authority that Commerce 
possesses under U.S. law to identify and avoid the imposition of double remedies in the context of 
NME investigations.  If the United States were to come  forward with this authority, the parties could 
then debate before the Pane l whether this authority is sufficient to address the problem of double 
remedies, and the United States could explain why Commerce did not apply this authority in the 
investigations at issue in this dispute.  Havi ng failed to do so, however, the United States should not 
be heard to criticize China for the manner  in which it has chosen to specify the measures at issue in 
this dispute.  
 
40. For the reasons stated herein, China resp ectfully requests that the Panel reject the 
United States' requests for preliminary rulings.
35 
 
_______________ 
 
   
 
                                                     
 
35 While China considers that the United States' requests for preliminary rulings have no legal 
foundation, China believes that the Panel should follow the practice of other panels in deferring any ruling on 
these requests until the final report.  See, e.g., Panel Report, US – Continued Zeroing, para. 7.28; Panel Report, 
Columbia – Ports of Entry, para. 7.14; Panel Report, Canada – Aircraft, para. 9.15.  Among other 
considerations, the Panel will then be in a position to assess whether the United States' due process rights were 
prejudiced by the alleged deficien cies in China's panel request.